A Condo certificate assures a buyer that the budget for the apartment is in order, and that provision has been made for maintenance needs that could arise in the future.
Lenders use this document, also known as a condo cert or lender's questionnaire, to screen homeowners associations with the same intensity potential buyers and renters face, and they do it because the federally backed financing sources (Fannie Mae and Freddie Mac) require it. If the condo development does not meet eligibility requirements, then no one can get conventional mortgage financing to buy in that development.
Condo units are widely considered riskier for lenders than single-family homes because the value of the unit is affected by the fiscal and physical well-being of the entire development. If other residents have fallen behind on paying their association fees, it affects the fiscal health of the entire community. If a high percentage of non occupant owners rent out their units and don't keep up with maintenance, it affects the physical state of the community.
So, the condo questionnaire is a form that either HOAs or association managers are required to fill out upon request from a lender. It provides important information about whether a condo development is "warrantable;" i.e., eligible for Fannie Mae or Freddie Mac financing.
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